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Brazil’s Bovespa Soars on Positive Retail Sales, Commodity Markets

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Latin American markets rise in line with commodity sectors

Latin American markets were taking cues from the higher commodity prices as of 3:00 PM ET on April 12, 2016. Specifically, the Brazilian stock exchange BM&F Bovespa SA was trading 4.0% higher, and the Mexican IPC index increased by 0.79%.

Reports came in that the foreign exchange reserves in Mexico increased to $178.4 billion in February 2016, compared to $176.3 billion in January.

The surge in global crude prices and other essential commodities caused the Colombian COLCAP index to trade with an upward bias of 1.9%. Colombia is highly dependent on crude prices, directly impacting its export revenues.

Among the Latin American indexes, the Argentinian Merval Index increased by 3.3% while the Chilean IPSA Select Index rose by 0.73%. Both indexes benefited from the global rise in copper prices. Chile is the largest producer of copper in the world.

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Brazil’s retail sales rise against expectations

Retail sales in Brazil rose unexpectedly in February, recording an increase of 1.2% on a monthly basis. This was in contrast to estimates of a 0.2% fall for the month and a 1.9% fall in January. A strong demand for food products, supermarket items, and furniture drove this figure. On an annual basis, however, retail sales across Brazil fell by 4.2% in February versus a 10.6% drop last month.

Impact on the market

Among the Latin America-focused ETFs, the iShares MSCI Brazil Capped ETF (EWZ) rose by 3.3% on April 12, 2016. The iShares MSCI Mexico Capped ETF (EWW) was trading 2.1% higher as of 3:00 PM ET on the day.

Among the Latin American countries, Mexico, Colombia, Chile, and Brazil are closely linked to crude oil and commodity prices. The PowerShares DB Commodity Tracking ETF (DBC) rose by 2.4% while the United States Oil ETF (USO) rose by 4.0%.

On a broad-based level, the iShares Latin America 40 ETF (ILF) rose by 3.1% while the iShares MSCI Emerging Markets ETF (EEM) rose by 1.8%.

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